THE Communication Workers Union has given its support to a bid for Eircom by Singapore Technologies Telemedia (STT).

This comes just one week after the employee share ownership trust (Esot) backed STT’s bid to acquire Eircom.

The union, which represents more than 5,000 workers at Eircom, said STT’s offer was “the only credible option” for the future of the heavily indebted Irish telecoms company.

“The CWU believes very strongly that Eircom needs a new owner who understands the industry and views the company as a long-term investment,” said CWU general secretary Steve Fitzpatrick. “To that end, we note the interest of STT and, more importantly, the support given to that approach by the Eircom Esot.

“Given that STT is a major industry player, it presents the prospect of an owner that understands the industry, new technologies and who in our view, is the only credible option given the stated alternatives.”

Eircom is being sold by its Sydney-listed parent group, called Eircom Holdings. The Australian company owns 57 per cent of Eircom. A number of private equity groups have expressed an interest in purchasing Eircom, with sources indicating that Luxembourg-based CVC had been “heavily engaged”.

Eircom’s appeal to potential acquirers has increased as a result of a recent restructuring accord between the company and its unions that will reduce its headcount by 1,200. This was expected to yield an annual saving of €130 million to Eircom but this target is now expected to be exceeded by €20 million.

Eircom has changed hands four times over the past decade and is loaded with about €3.8 billion in debt. It was acquired in 2006 by failed Australian investment group Babcock Brown, which spun it off into a separate, listed satellite fund, which is now named Eircom Holdings.

Mr Fitzpatrick made it clear yesterday that Eircom’s workers did not want another private equity owner. “The members’ sacrifices have not been made to further enrich private equity groups or venture capitalists,” he said.

“Any attempts by the present owners of Eircom to use the recent accord to increase the asking price for their shares will be fully opposed by the union.”

On Wednesday, shares in Eircom Holdings were suspended due to speculation about the sale process. That suspension is due to end today, although the group could seek an extension from the Australian stock exchange.

Eircom Holdings has indicated that it wants to conclude the sale process by the end of June. It has stated that in the event a sale is not agreed it could pay shareholders a dividend from reserves.

“The major financial loss suffered by the union members in Eircom was done on the clear understanding that the agreement would form part of a broader strategic plan which would seek to copper fasten the long-term future of the company,” Mr Fitzpatrick said.

“Therefore there will be no further union support contemplated or forthcoming on any agenda unless it is part and parcel of that process.”